Going self-employed is very exciting, in theory. In the UK, the number of self-employed workers soared from 3.3 million to 4.8 million between 2001 and 2017, reports BBC News. However, though you could “be your own boss” by joining those ranks, do particular risks apply?
You probably won't be too surprised that the answer is “yes”. Many of these risks pertain to insurance – including that for your vehicle which you might often need to use in your work.
What technically counts as a “self-employed” person
It's a question well worth asking, as there are many different definitions. You could be deemed self-employed if you run your own business rather than work for an employer, and have control over when you take on work you receive from multiple clients.
Entrepreneurs, freelancers, contractors and gig economy workers can also be self-employed. However, the definition doesn't quite extend to zero-hours workers, whose employment rights are in line with those of regular employees.
Insurers could discriminate against you as a self-employed person
This gets to the crux of the problem of self-employment – the question of the rights to which you are entitled. You could be surprised to learn that you are at a disadvantage when applying for insurance.
What if your work rarely takes you outside the confines of your home? However, in actuality, you might still need to leave the house, at least occasionally, for business purposes – such as to attend meetings or fetch stock or equipment.
Modified cars are relatively expensive to insure
If your work often takes you onto the road, you might have modified your car to help it better meet your needs. Perhaps you've added an in-car sound system to let you enjoy music in-between meetings, or changed the car body's colour or graphics to include your company logo.
However, these are examples of modifications that can hike your premiums, at least from standard insurers. Fortunately, the specialist product of modified car insurance is often much cheaper.
And you also need specialist business car insurance
The IPSE – the Association of Independent Professionals and the Self-Employed – points out that this cover is legally required if you use your car for work. Admittedly, most people aren't quite aware of this. However, this cover must be in place even for when you take the odd trip in that vehicle.
Now, here's something that won't be nearly as revelatory: car insurance can be expensive. Therefore, you should look for a policy specifically built for the self-employed and sole traders.
Being young can particularly hit you hard in the pocket
One final thing that’s worth noting, if it applies to you, is what insurers make of your age, and therefore experience on the road. Unfortunately, no matter how safely they drive, young people are often required to shell out a particularly large amount for their car insurance.
That's especially problematic when you consider that, according to statistics from the UK's Office for National Statistics, 181,000 workers in the 16-24 age bracket were officially self-employed in 2016. That marks a mammoth 74% increase from the corresponding 104,000 tally recorded in 2001.